Entrada Therapeutics, Inc. (TRDA) FY 2024 MD&A

Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes appearing elsewhere in this Annual Report on Form 10-K (Annual Report). Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in, or implied by, the forward-looking statements contained in the following discussion and analysis. You should carefully read the “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” sections of this Annual Report to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements contained in the following discussion and analysis.

Overview

We are a clinical-stage biopharmaceutical company aiming to transform the lives of patients by establishing a new class of medicines which engage intracellular targets that have long been considered inaccessible. We enter 2025 with significant momentum, including the planned initiation of our next clinical trial of ENTR-601-44, regulatory submissions under review for ENTR-601-45, and the ongoing progress of our VX-670 partnership with Vertex Pharmaceuticals Incorporated (“Vertex”). We plan to have four clinical programs in patients ongoing by the end of 2025, marking a new phase in the Company’s growth. This regulatory progress follows positive preliminary data in healthy volunteers from a Phase 1 clinical trial, ENTR-601-44-101, reported in 2024.

Key business updates include:

•In 2024, we submitted regulatory applications to initiate global Phase 1/2 MAD clinical studies in patients for ENTR-601-44 in the United States, United Kingdom and Europe. We have also submitted regulatory applications to initiate a Phase 1/2 MAD clinical study of ENTR-601-45 in the United Kingdom and Europe for patients living with DMD who are amenable to exon 45 skipping.

•On February 3, 2025, we announced the receipt of authorization from the United Kingdom’s Medicines and Healthcare Products Regulatory Agency (“MHRA”) and Research Ethics Committee for its Clinical Trial of an Investigational Medicinal Product to initiate ELEVATE-44-201, a Phase 1/2 multiple ascending dose (“MAD”) clinical study of ENTR-601-44 for the potential treatment of Duchenne muscular dystrophy (“Duchenne” or “DMD”) in patients with a confirmed mutation in the DMD gene amenable to exon 44 skipping. We are on track to initiate ELEVATE-44-201 in the United Kingdom in the second quarter of 2025.

•On February 24, 2025, we announced that the United States Food and Drug Administration (“FDA”) had lifted the clinical hold on the Investigational New Drug application (“IND”) for ENTR-601-44, and we received authorization to initiate ELEVATE-44-102, a Phase 1b MAD clinical study of ENTR-601-44 in adult DMD patients. The Company plans to initiate study enrollment in the first half of 2026.

•Based on the positive preclinical data, we are on track to submit regulatory applications to initiate a clinical trial of our third Duchenne product candidate, ENTR-601-50, in patients who are exon 50 skipping amenable, in the fourth quarter of 2025.

•In 2024, we selected ENTR-601-51 as our clinical candidate for our exon 51 program in patients who are exon 51 skipping amenable, and expect to submit global regulatory filings in 2026.

•Our Vertex partnered candidate, VX-670, is in an ongoing global Phase 1/2 clinical trial, and in November 2024, Vertex announced completion of the Phase 1 SAD portion of the study and initiation of the Phase 2 MAD portion to evaluate both safety and efficacy.

•We have also generated positive preclinical data from programs outside of our neuromuscular franchise, which include new moieties, and expect to share our first clinical candidate in ocular disease later in 2025.

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We believe that the potential success of our early programs can translate into the efficient development of additional therapeutic candidates and allow us to build portfolios in neuromuscular disease and beyond.

Since our inception, we have devoted substantially all our resources to research and development efforts relating to our EEV Platform, advancing development of our portfolio of programs and general and administrative support for these operations, including raising capital. We have raised over $850.0 million of gross proceeds from equity sales to leading biotechnology investors and from the Vertex Agreement.

Since inception, we have incurred significant net losses. As of December 31, 2024, we had an accumulated deficit of $129.3 million. We expect to generate operating losses and negative operating cash flows for the foreseeable future as we advance our platform and EEV therapeutic candidates. We will not generate any revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for one or more therapeutic candidates, if ever. If we obtain regulatory approval for any therapeutic candidates, we expect to incur significant expenses related to developing our internal commercialization capability to support product sales, marketing and distribution.

Furthermore, we expect to continue to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy, as we advance therapeutic candidates through preclinical and, if successful, into clinical development, seek regulatory approval, prepare for and, if any therapeutic candidates are approved, proceed to commercialization and operate as a public company. Until such time as we can generate significant revenue from product sales, if ever, we expect to finance our operations through the sale of equity, debt financings or other capital sources, including potential collaborations with other companies or other strategic transactions.

If we are unable to obtain funding, we will be forced to delay, reduce, or eliminate some or all of our research and development programs, product portfolio expansion and ultimate commercialization efforts, which would adversely affect our business prospects, or we may be unable to continue operations. Although we continue to pursue these plans, we may not be successful in obtaining sufficient funding on terms acceptable to us to fund continuing operations, if at all.

Because of the numerous risks and uncertainties associated with product development, we are unable to predict the timing or amount of increased expenses or when or if we will be able to achieve or maintain profitability. Even if we can generate product sales, we may not become profitable. If we fail to become profitable or are unable to sustain profitability on a continuing basis, we may be unable to continue our operations at planned levels and be forced to reduce or terminate our operations.

As of December 31, 2024, we had cash, cash equivalents and marketable securities of $420.0 million. Based on our current operating plans, we believe that our cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to fund our operations into the second quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could exhaust our available capital resources sooner than we expect. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources.” To finance our operations beyond that point we will need to raise additional capital, which cannot be assured.

Components of Our Results of Operations

Revenue

Substantially all of our revenue to date has been derived from the Vertex Agreement. We do not expect to generate any revenue from the sale of products unless and until such time that our product candidates have advanced through clinical development and regulatory approval, if ever. If our development efforts for our therapeutic candidates are successful and result in regulatory approval or we successfully enter into collaboration or license arrangements with third parties, we may generate revenue in the future from product sales, payments from collaboration or license arrangements including those that we may enter into with third parties, or any combination thereof.

Operating Expenses

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts, and the development of our programs. These expenses include:

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•personnel-related expenses, including salaries, related benefits and stock-based compensation expense for individuals engaged in research and development functions;

•expenses incurred in connection with our research programs and development of our therapeutic candidates and research programs, including under agreements with third parties, such as consultants, contractors and CROs to conduct preclinical studies and clinical trials;

•the cost of developing and validating our manufacturing process for use in our preclinical studies and potential future clinical trials, including the cost of raw materials used in our research and development activities and engaging with third party CMOs;

•costs incurred in connection with the performance of research and development activities under the Vertex Agreement;

•the cost of laboratory supplies and research materials;

•the costs of payments made under third-party licensing agreements and related future payments should certain development and regulatory milestones be achieved; and

•facilities, depreciation and other direct and allocated expenses, including rent and other operating costs, incurred as a result of our research and development activities.

We expense research and development costs as incurred. Non-refundable advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the related goods are delivered or the services are performed, or when it is no longer expected that the goods will be delivered or the services rendered. Upfront payments under license agreements are expensed upon receipt of the license and annual maintenance fees under license agreements are expensed in the period in which they are incurred. Milestone payments under license agreements are accrued, with a corresponding expense being recognized, in the period in which the milestone is determined to be probable of achievement and the related amount is reasonably estimable.

Our research and development costs are primarily devoted to supporting our neuromuscular program development and platform discovery efforts. Our direct external research and development expenses consist primarily of fees paid to outside consultants, CROs, CMOs and research laboratories in connection with our process development, manufacturing and clinical development activities. Our direct external research and development expenses also include fees incurred under license and intellectual property purchase agreements. We track these external research and development costs on a program-by-program basis as we identify specific programs and product candidates to advance into clinical development.

We do not allocate employee costs, costs associated with our development efforts and facilities, including depreciation or other indirect costs, to specific programs because these costs are deployed across multiple programs and, as such, are not separately classified. We use internal resources and third-party consultants primarily to conduct our research and development activities as well as for managing our process development, manufacturing and clinical development activities.

Therapeutic candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect that our research and development expenses will increase substantially in connection with our platform development efforts and planned preclinical and clinical development activities in the near term and in the future. We expect that the research and development expenses of our programs will increase in the near term as we initiate and conduct clinical trials as well as investigational new drug (CTA/IND)-enabling activities for our therapeutic candidates. Therefore, we cannot reasonably estimate or know the nature, timing, and costs of the efforts that will be necessary to complete the preclinical and clinical development of any of our therapeutic candidates. The successful development of our therapeutic candidates is highly uncertain. This is due to the numerous risks and uncertainties associated with product development, including the following:

•the scope, timing, rate of progress and expenses of our ongoing and potential future research activities, including preclinical and IND-enabling studies, clinical trials and other research and development activities we decide to pursue;

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•the successful initiation, enrollment and completion of clinical trials under current good clinical practices;

•the timing of filing and acceptance of INDs or comparable foreign applications that allow commencement of future clinical trials for our therapeutic candidates;

•whether our therapeutic candidates show safety and efficacy in our clinical trials and an acceptable risk-benefit profile in the intended populations;

•our ability to hire and retain key research and development personnel;

•our ability to successfully develop, obtain regulatory and marketing approvals of our therapeutic candidates for the expected indications and patient populations;

•our ability to establish and maintain agreements with third-party manufacturers for clinical supply for our clinical trials and commercial manufacturing, if our therapeutic candidates are approved;

•commercializing therapeutic candidates, if and when approved, whether alone or in collaboration with others;

•our ability to maintain a continued acceptable safety, tolerability and efficacy profile of our therapeutic candidates following approval;

•our ability to establish new licensing or collaboration arrangements to support our potential therapeutic candidates on favorable business terms;

•any decisions we make to discontinue, delay or modify our programs to focus on others;

•obtaining, maintaining, protecting and enforcing patent and trade secret protection and regulatory exclusivity for our therapeutic candidates; and

•obtaining and maintaining adequate coverage and reimbursement from third party payors.

A change in the outcome of any of these variables with respect to the development of any of our therapeutic candidates could significantly change the costs and timing associated with the development of that therapeutic candidate. We may never succeed in obtaining regulatory approval for any of our therapeutic candidates.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and personnel-related costs, including stock-based compensation, for our personnel in executive, legal, finance and accounting, corporate and business development, human resources and other administrative functions. General and administrative expenses also include: legal fees relating to intellectual property and corporate matters; professional fees paid for accounting, auditing, consulting and tax services; insurance costs; travel expenses; information technology expenses; and facility costs not otherwise included in research and development expenses.

We anticipate that our general and administrative expenses will increase in the future as we increase our headcount and expand our facilities to support our continued research activities and development of our programs and EEV Platform. We also anticipate that we will incur increased accounting, audit, legal, regulatory, compliance, director and officer insurance and investor and public relations expenses associated with operating as a public company.

Interest and Other Income

Interest and other income (expense) consists primarily of interest earned on our invested cash equivalents and marketable securities.

Income Taxes

The Company recorded income tax expense of $0.9 million for the year ended December 31, 2024 and income tax expense of $18.7 million for the year ended December 31, 2023. The income tax expense recorded for the year ended

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December 31, 2024 was driven largely by the current tax liability associated with the $75.0 million payment for the achievement of the clinical advancement milestone for VX-670 and $1.7 million in related interest owed to taxing authorities pursuant to Section 453A. The income tax expense recorded for the year ended December 31, 2023 was driven largely by the current tax liability associated with the tax recognition of the upfront payment received pursuant to the Vertex Agreement and the capitalization of research and development expenses under Section 174. For both periods, a significant portion of the taxable income related to the collaboration payments was offset by current year expenses and prior year accumulated losses. For additional details about the current year tax provision, refer to Note 9, Income Taxes, to the Consolidated Financial Statements appearing elsewhere in this Annual Report on Form 10-K.

As of December 31, 2024, we had federal net operating loss carryforwards of $4.2 million, which may be available to offset future taxable income. None of our federal net operating loss carryforwards will expire, but all are limited in their usage to an annual deduction equal to 80% of annual taxable income. In addition, as of December 31, 2024, we had state net operating loss carryforwards of $6.0 million, which may be available to offset future taxable income and expire at various dates beginning in 2036. As of December 31, 2024, we also had federal and state research and development tax credit carryforwards of $3.4 million and $1.5 million, respectively, which may be available to reduce future tax liabilities and expire at various dates beginning in 2039 and 2035, respectively.

Critical Accounting Policies and Significant Judgments and Estimates

Our management’s discussion and analysis of financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States. The preparation of our consolidated financial statements and related disclosures requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions.

While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.

Revenue Recognition

Substantially all of our revenue to date has been generated from the Vertex Agreement. We account for revenue pursuant to ASC Topic 606, "Revenue from Contracts with Customers" ("ASC 606"). For additional details regarding our associated accounting policies of ASC 606, refer to Notes 2, Summary of Significant Accounting Policies, and 12, Collaboration and License Agreements, to the consolidated financial statements appearing elsewhere in this Annual Report on Form 10-K.

As part of the process of preparing our consolidated financial statements, we are required to make the following significant judgements and estimates to determine amounts to be recognized in collaboration revenue.

The Company recognizes revenue as research and development services are provided using an input method, according to the costs incurred as related to the respective research services and the costs expected to be incurred in the future to satisfy the performance obligations. As the Company progresses towards satisfaction of performance obligations under the Vertex Agreement, the estimated costs associated with the remaining effort required to complete the performance obligations in accordance with the research plans may change, which may materially impact revenue recognition. The Company regularly evaluates and, when necessary, updates the costs associated with the remaining effort pursuant to the performance obligations under the Vertex Agreement.

The Company estimates the amount of consideration to which it will be entitled in exchange for transferring the promised goods or services to a customer. The Company determines the amount of variable consideration by using the expected value method or the most likely amount method. The Company includes the unconstrained amount of estimated variable consideration in the transaction price. The amount included in the transaction price is constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each

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subsequent reporting period, the Company re-evaluates the estimated variable consideration included in the transaction price and any related constraint, and if necessary, adjusts its estimate of the overall transaction price.

Research and Development Expenses

As part of the process of preparing our consolidated financial statements, we are required to estimate our accrued research and development expenses. This process involves estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs. We make estimates of our accrued expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at that time. We periodically corroborate the accuracy of these estimates with the service providers and make adjustments, as necessary. Examples of estimated accrued research and development expenses include those related to fees paid to:

•vendors in connection with discovery and preclinical development activities;

•CROs in connection with the ELEVATE clinical studies; and

•third-party manufacturers in connection with the development and scale up activities and the production of materials.

We base the expense recorded related to contract research and manufacturing on our estimates of the services received and efforts expended pursuant to quotes and contracts with multiple service providers that conduct services and supply materials. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows. In accruing service fees, we estimate the time period over which services were performed and the level of effort expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. We record these as prepaid expenses on our consolidated balance sheets.

Stock-Based Compensation

We account for all stock-based compensation awards granted as stock-based compensation expense at fair value in accordance with FASB ASC Topic 718, Compensation—Stock Compensation (ASC 718). Our stock-based payments include stock options, restricted stock units (“RSUs”), and performance stock units (“PSUs”). We estimate the fair value of stock options granted using the Black-Scholes option-pricing model (“Black-Scholes”) for stock option grants to both employees and non-employees. The fair value of the Company’s common stock is used to determine the fair value of RSUs and PSUs. The Company’s stock-based compensation awards are subject to service-based vesting conditions. Compensation expense related to stock option awards and RSUs awards with only service-based vesting is recognized over the requisite service period, which is generally the vesting period, on a straight-line basis. For PSUs, which also contain performance based vesting criteria, we recognize stock-based compensation expense over the requisite service period using the accelerated attribution method once achievement is probable. Stock-based compensation expense is classified in the accompanying consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipient’s service payments are classified.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model, which requires inputs based on certain subjective assumptions, including the expected share price volatility, the expected term of the option, the risk-free interest rate for a period that approximates the expected term of the option, and our expected dividend yield. Prior to our IPO, there was no public market for our common stock, and consequently, the estimated fair value of our common stock was determined by our board of directors as of the date of each option grant, with input from management, considering third-party valuations of our common stock as well as our board of directors’ assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent third-party valuation through the date of the grant. These third-party valuations were performed in accordance with the guidance outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation (“Practice Aid”). The Practice Aid identifies various available methods for allocating the enterprise value across classes of series of capital stock

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in determining the fair value of our common stock at each valuation date. Since our IPO, we have determined the fair market value of our common stock using the closing price of our common stock as reported on the Nasdaq Global Market on the date of grant.

Recently Issued Accounting Pronouncements

See Note 2, Summary of Significant Accounting Policies, in the notes to our consolidated financial statements included elsewhere in this Annual Report for a description of recent accounting pronouncements applicable to our business.

Results of Operations

Comparison of the years ended December 31, 2024 and 2023

Research and Development Expenses

Research and development expenses were $125.3 million for the year ended December 31, 2024, compared to $99.9 million for the year ended December 31, 2023. The increase of $25.4 million in research and development expenses was primarily attributable to:

•an increase of $10.8 million in direct research and development costs primarily driven by additional activities performed to advance our DMD programs and discovery work for future product candidates;

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•an increase of 10.5 million in personnel related costs driven by increased headcount in our research and development function, inclusive of stock-based compensation expense of $7.8 million and $6.2 million for the years ended December 31, 2024 and 2023, respectively; and

•an increase of $4.1 million in facility related and other costs to support our expanding operations.

We expect that our research and development expenses will increase as we advance ENTR-601-44 and ENTR-601-45 through clinical trials, progress ENTR-601-50 and ENTR-601-51 through preclinical development and into clinical trials, and continue to perform discovery work for future product candidates.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2024 were $38.5 million, compared to $32.3 million for the year ended December 31, 2023. The increase of $6.2 million was primarily attributable to the following:

•a $5.9 million increase in personnel-related costs, primarily as a result of the increase in headcount in our general and administrative function, inclusive of stock-based compensation expense of $10.1 million and $6.9 million for the years ended December 31, 2024 and 2023, respectively.

Interest and Other Income

Total interest and other income was $19.5 million for the year ended December 31, 2024, compared to $15.2 million of interest and other income for the year ended December 31, 2023. This increase is primarily driven by higher interest rates and larger investments in debt securities.

Provision for Income Taxes

The Company recorded income tax expense of $0.9 million for the year ended December 31, 2024 and income tax expense of $18.7 million for the year ended December 31, 2023. The income tax expense recorded for the year ended December 31, 2024 was driven largely by the current tax liability associated with the $75.0 million payment for the achievement of the clinical advancement milestone for VX-670 and $1.7 million in related interest owed to taxing authorities pursuant to Section 453A. The income tax expense recorded for the year ended December 31, 2023 was driven largely by the current tax liability associated with the tax recognition of the upfront payment received pursuant to the Vertex Agreement and the capitalization of research and development expenses under Section 174. For both periods, a significant portion of the taxable income related to the collaboration payments was offset by current year expenses and prior year accumulated losses.

Liquidity and Capital Resources

Sources of Liquidity

Since our inception in 2016, we have incurred significant operating losses. As of December 31, 2024 and 2023, we had an accumulated deficit of $129.3 million and $195.0 million, respectively. We expect to generate operating losses and negative operating cash flows for the foreseeable future as we advance our platform and EEV therapeutic candidates. Since our inception, we have raised over $850.0 million of gross proceeds from sales of stock to leading biotechnology investors and from the Vertex Agreement. As of December 31, 2024, we had cash, cash equivalents and marketable securities of $420.0 million.

In September 2023, we entered into a sales agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”) under which we may, from time to time, issue and sell shares of our common stock having aggregate sales proceeds of up to $150.0 million, in a series of one or more ATM equity offerings (the “2023 ATM Program”). Cowen is not required to sell any specific share amounts but acts as the Company’s sales agent, using commercially reasonable efforts consistent with its normal trading and sales practices. Pursuant to the Sales Agreement, shares will be sold pursuant to our shelf registration statement on Form S-3 (File No. 333-268099) filed with the SEC on November 1, 2022, including the base prospectus contained therein, as declared effective by the SEC on November 7, 2022. Our common stock will be sold at prevailing market prices at the time of the sale, and as a result, prices may vary. As of December 31, 2024, we have not sold any shares of common stock under the ATM program.

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In June 2024, we entered into a securities purchase agreement with a limited number of investors relating to a registered direct offering (the “June 2024 Offering”) of 3,367,003 shares of our common stock at a purchase price of $14.85 per share and, in lieu of common stock to certain investors who so chose, pre-funded warrants (the “Pre-Funded Warrants”) to purchase 3,367,003 shares of our common stock at a purchase price of $14.8499 per Pre-Funded Warrant, which represents the price per share at which the shares of common stock were sold to the investors in the June 2024 Offering, minus $0.0001, which is the exercise price of each Pre-Funded Warrant. The June 2024 Offering was made pursuant to the shelf registration statement on Form S-3 (File No. 333-268099) previously filed with the SEC on November 1, 2022 and declared effective by the SEC on November 7, 2022. The aggregate net proceeds from the sale of common stock and Pre-Funded Warrants in the June 2024 Offering were approximately $99.6 million, after deducting offering expenses payable by us. We will receive nominal proceeds, if any, from the exercise of the Pre-Funded Warrants.

Cash Flows

The following table summarizes our cash flows for each of the periods presented:

Operating Activities

For the year ended December 31, 2024, net cash used in operating activities was $41.6 million, and was driven by our net income of $65.6 million, net cash used in changes in our operating assets and liabilities of $118.9 million, adjustments for non-cash expenses relating to stock-based compensation expense of $17.9 million and depreciation expense of $3.8 million, and adjustments for non-cash income relating to accretion of premiums and discounts on marketable securities of $10.0 million.

For the year ended December 31, 2023, net cash provided by operating activities was $139.8 million, and was driven by our net loss of $6.7 million, net cash provided by changes in our operating assets and liabilities of $136.3 million, adjustments for non-cash expenses relating to stock-based compensation expense of $13.1 million and depreciation expense of $2.8 million, and adjustments for non-cash income related to net amortization of premiums and discounts of $5.7 million on marketable securities.

Investing Activities

Net cash used in investing activities was $27.8 million for the year ended December 31, 2024, and was driven by $437.7 million in purchases of marketable securities and $3.2 million in purchases of property and equipment, which were partially offset by $413.1 million from the maturities of marketable securities.

Net cash used in investing activities was $138.4 million for the year ended December 31, 2023, and was driven by $407.2 million in purchases of marketable securities and $5.6 million from purchases of property and equipment,, which were partially offset by $274.4 million from the maturities of marketable securities.

Financing Activities

Net cash provided by financing activities was $103.0 million for the year ended December 31, 2024, consisting of $99.6 million in net proceeds from sales of our common stock and pre-funded warrants, $2.8 million proceeds from stock option exercises and $0.6 million from the issuance of common stock under our 2021 Employee Stock Purchase Plan (the “ESPP”).

Net cash provided by financing activities was $21.0 million for the year ended December 31, 2023, consisting of $19.4 million in net proceeds from sales of our common stock in connection with the Vertex Agreement, $1.2 million of proceeds from stock option exercises and $0.4 million from the issuance of common stock under the ESPP.

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Funding Requirements

We expect to incur significant expenses and operating losses for the foreseeable future as we advance the preclinical and, if successful, the clinical development of our programs. In addition, we expect to incur additional costs associated with operating as a public company. Our operating expenses and future funding requirements are expected to increase substantially as we continue to advance our portfolio of programs. Based on our current operating plans, we believe that our cash, cash equivalents and marketable securities as of December 31, 2024 will be sufficient to fund our operations into the second quarter of 2027. We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect.

Because of the numerous risks and uncertainties associated with research, development and commercialization of our candidates, we are unable to estimate the exact amount of our working capital requirements. Our future capital requirements will depend on many factors, including costs associated with:

•the continuation of our current research programs and our preclinical development of therapeutic candidates from our current research programs;

•seeking to identify additional research programs and additional therapeutic candidates;

•advancing our existing and future therapeutic candidates into clinical development;

•initiating preclinical studies and clinical trials for any therapeutic candidates we identify and develop or expand development of existing programs into additional indications;

•maintaining, expanding, enforcing, defending and protecting our intellectual property portfolio and providing reimbursement of third-party expenses related to our patent portfolio;

•timing of manufacturing for our therapeutic candidates and commercial manufacturing if any therapeutic candidate is approved;

•establishing and maintaining clinical and commercial supply for the development and manufacture of our therapeutic candidates;

•seeking regulatory and marketing approvals for any of our therapeutic candidates that we develop, if any;

•seeking to identify, establish and maintain additional collaborations and license agreements, and the success of those collaborations and license agreements;

•ultimately establishing a sales, marketing and distribution infrastructure to commercialize any platforms for which we may obtain marketing approval, either by ourselves or in collaboration with others;

•generating revenue from commercial sales of therapeutic candidates we may develop for which we receive marketing approval;

•hiring additional personnel including research and development, clinical and commercial personnel;

•adding operational, financial and management information systems and personnel, including personnel to support our product development;

•achieve sufficient market acceptance, coverage and adequate reimbursement from third-party payors and adequate market share and revenue for any approved products;

•acquiring or in-licensing products, intellectual property and technologies; and

•the ongoing costs of operating as a public company and recent increases in inflationary rates.

Until such time, if ever, as we can generate substantial product revenue to support our cost structure, we expect to finance our cash needs through a combination of equity offerings, debt financings, license and collaboration agreements

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and other similar arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders could be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures, or declaring dividends. If we raise funds through collaborations or other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or therapeutic candidates or grant licenses on terms that may not be favorable to us and/or may reduce the value of our common stock. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market our therapeutic candidates even if we would otherwise prefer to develop and market such therapeutic candidates ourselves.

Contractual Obligations and Commitments

Lease Commitments

IDB Lease

We have a noncancellable operating lease of approximately 81,229 square feet of office and laboratory space at One Design Center Place in Boston, Massachusetts ("IDB Lease"). The term of the IDB lease is approximately 10 years and commenced in February 2023. The initial fixed rental rate is $0.5 million per month, which is for a 12 month period during which the base rent is payable for 65,000 square feet, and will increase 3% per annum thereafter for the entire 81,229 square feet leased.

IDB Sublease

The Company subleases a portion of the office and laboratory space leased under the IDB Lease to a third-party. The term of the sublease commenced in April 2023. The sublease term is 3 years. The initial fixed rental rate is approximately $0.2 million per month and will increase 3% per annum thereafter.

6 Tide Street Lease

We have a noncancellable operating lease of 23,189 square feet of office and laboratory space at 6 Tide Street in Boston, Massachusetts. The term for the lease will end on November 30, 2025. The fixed rental rate is $0.4 million per month for the remainder of the lease term.

For additional information about our lease commitments, see Note 11, Leases, to our consolidated financial statements included elsewhere in this Annual Report.

License Agreements

We have also entered into a license agreement (“OSIF License Agreement”) with Ohio State Innovation Foundation (“OSIF”), an affiliate of The Ohio State University (“OSU”), under which we are obligated to make specific milestone and royalty payments. The payment obligations under this agreement are contingent upon future events, such as our achievement of specified development, regulatory and commercial milestones, or generating product sales. For additional information about our OSIF License Agreement and amounts that could become payable in the future under such agreements, see “Business—Intellectual property— License agreement with The Ohio State University” and Note 10, Commitments and Contingencies, to our consolidated financial statements included elsewhere in this Annual Report.

Other Funding Commitments

We enter into contracts in the normal course of business with CROs, third-party manufacturers, and other third parties for preclinical research studies and testing and manufacturing services. These contracts do not contain minimum purchase commitments and are cancellable by us upon prior written notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including non-cancelable obligations of our service providers, up to the date of cancellation.

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Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company”, or “EGC”, under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended, for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.

As an EGC, we may, and intend to, take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:

•we may present only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

•we may avail ourselves of the exemption from providing an auditor’s attestation report on our system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”);

•we may avail ourselves of the exemption from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”) regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis;

•we may provide reduced disclosure about our executive compensation arrangements; and

•we may not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.

We will remain an EGC until the earliest to occur of (i) the last day of the fiscal year following the fifth anniversary of the completion of our IPO, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1.0 billion in non-convertible debt during the previous rolling three-year period or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Based on the market value of our common stock held by our non-affiliates as of the last business day of the fiscal quarter ended June 30, 2024, we no longer qualify as a “smaller reporting company” as defined in the Exchange Act, effective December 31, 2024. Therefore, beginning with our Quarterly Report on Form 10-Q for the fiscal quarter ending March 31, 2025, we will no longer be eligible to rely on the reduced disclosure and reporting requirements applicable to smaller reporting companies, while still applying the scaled disclosure requirements for smaller reporting companies in this Annual Report.